Bad debts are estimated to be 3 of credit sales


Asked by wiki @ in Business viewed by 88 People


At December 31, 2017, Hawke Company reports the following results for its calendar year.

Cash sales $1,905,000
Credit sales 5,682,000.
In addition, its unadjusted trial balance includes the following items.
Accounts receivable $1,270,100 debit
Allowance for doubtful accounts 16,580 debit
Reqiured:
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.
A. Bad debts are estimated to be 1.5% of credit sales.
B. Bad debts are estimated to be 1% of total sales.
C. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2015, balance sheet given the facts in part 1a.
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2015, balance sheet given the facts in part 1c.

Answered by wiki @



The  adjusting entries to recognize bad debts including  how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2015 balance sheet are:

1a. Journal entry to estimate Bad debts at 1.5% of credit sales.

First step is to calculate the Bad debt accrual  

Bad debt accrual=Total credit sales × Bad debt accrual  percentage

Bad debt accrual=$ 5,682,000×1.5%  

Bad debt accrual=$85,230

Second step is to calculate Bad debt expense for Dec 31

 Bad debt accrual        $85,230

Less Allowance for doubtful account balance ($16,580)

Bad debt expense for Dec 31       $101,810

Third step is to prepare the Adjusting Entry    

Debit Bad debt expense       $101,810

Credit Allowance for doubtful account  $101,810

(To record Bad debts at 1.5% of credit sales)

1b. Journal entry to estimate Bad debts at 1% of credit sales.

First step is to calculate the Bad debt accrual    

Total credit sales    $5,682,000

Total cash sales    $1,905,000  

Total sales $7,587,000

($5,682,000+$1,905,000)

Bad debt accrual % 1%  

Bad debt accrual        $75,870

($7,587,000× 1%)

Second step is to calculate Bad debt expense for Dec 31

Bad debt accrual         $75,870

Less Allowance for doubtful account balance ($16,580)  

Bad debt expense for Dec 31         $92,450

Third step is to prepare the Adjusting Entry  

Debit Bad debt expense        $92,450

Credit Allowance for doubtful account  $92,450

(To record Bad debts at 1% of credit sales)

1c. Journal entry to estimate 5% of year-end accounts receivable are uncollectible

First step is to calculate the Bad debt accrual  

Accounts Receivable    $1,270,100

Bad debt accrual % 5.0%  

Bad debt accrual         $63,505

($1,270,100×5%)

 

Second step is to calculate Bad debt expense for Dec 31

Bad debt accrual         $63,505

Less Allowance for doubtful account balance      ($16,580)

Bad debt expense for Dec 31         $80,085

Third step is to prepare the Adjusting Entry  

Debit Bad debt expense         $80,085  

Credit Allowance for doubtful account       $80,085  

(To record accounts receivable uncollectible)

2. How Accounts Receivable and the Allowance for Doubtful Accounts should appear on its December 31, 2015, balance sheet:   

Balance Sheet as on December 31, 2015

Accounts Receivable (gross)    $1,270,100

Less: Allowance for doubtful accounts       $101,810

Accounts Receivable (net) $1,168,290

3.  How Accounts Receivable and the Allowance for Doubtful Accounts should appear on its December 31, 2015, balance sheet:   

 

Balance Sheet as on  December 31, 2015

Accounts Receivable (gross)    $1,270,100

Less: Allowance for doubtful accounts        $80,085

Accounts Receivable (net) $1,190,015

Learn more here:

brainly.com/question/15714259


Do you know the better answer?

Similar Questions

Which of the following illustrates an anthropogenic form of pollution

Asked by wiki @ in Geography viewed by 180 persons

Which of the following illustrates an anthropogenic form of pollution?A) a large plume of ash from an erupting volcanoB) large clouds of smoke from a forest fire caused by lightningC) …

A short term effect of bulimia might include weight loss

Asked by wiki @ in Health viewed by 341 persons

A short term effect of bulimia might include weight loss A . true B. false

The formation of the hawaiian islands is one example of

Asked by wiki @ in Biology viewed by 203 persons

The formation of the Hawaiian Islands is one example of a. volcanoes forming over a hot spot. b. volcanoes forming along plate boundaries. c. the Ring of Fire. d. random …

Rita is a registered dietician what does her work entail

Asked by wiki @ in Physics viewed by 122 persons

Select the correct answer. Rita is a registered dietician. What does her work entail? A. prescribing medication for clients B. cooking healthy meals for students C. demonstrating how to use …

0.87 as a fraction

Asked by wiki @ in Mathematics viewed by 50 persons

Write 0.87 as a fraction in simplest form.

How to find the vertex of a graph absolute value

Asked by wiki @ in Mathematics viewed by 161 persons

What are the coordinates of the vertex of the graph of the absolute value function h(x) = 3|x + 5| + 2? A) (5,-2) B) (-5,2) C) (5,2) D) (2,-5)

Is there a difference in the left and right twix

Asked by wiki @ in Arts viewed by 171 persons

I DON’T GET IT WHAT IS THE DIFFERENCE BETWEEN LEFT TWIX AND RIGHT TWIX BESIDES THERE NAME?!?!

0.2 repeating as a fraction

Asked by wiki @ in Mathematics viewed by 52 persons

Write 0.2 repeating as a fraction in simplest form.

Which of these is not part of the solar system

Asked by wiki @ in Biology viewed by 115 persons

Which of these is not part of our solar system. A asteroids B.black holes C. stars D. Planets

102 divided by 6

Asked by wiki @ in Mathematics viewed by 106 persons

What is 102 divided by 6 in distributive property

Where did the term impressionism come from

Asked by wiki @ in Arts viewed by 117 persons

Where did the term “Impressionism” come from? a. Critics who were impressed by this form of art. b. Critics who were not impressed by this form of art. c. Critics …

A venturi meter is a device for measuring the speed

Asked by wiki @ in Physics viewed by 165 persons

A venturi meter is a device for measuring the speed of a fluid within a pipe. The drawing shows a gas flowing at a speed v2 through a horizontal section …

What is the greatest barrier to reviewing mental health treatment

Asked by wiki @ in Social Studies viewed by 140 persons

What is the greatest barrier to reviewing mental health treatment?

Cooperatives save members money by

Asked by wiki @ in Business viewed by 171 persons

Cooperatives save members money by O purchasing supplies and services as a group. securing financing from banks as a group. O charging more to sell their products as a group. …

The point where separation of the dna occurs is called

Asked by wiki @ in Biology viewed by 193 persons

The point where separation of the DNA occurs is called the replication fork. True False

Why is leonardo da vinci known as a renaissance man

Asked by wiki @ in Arts viewed by 188 persons

Why is Leonardo da Vinci often referred to as a "Renaissance Man"?

What role did geography play in the battle of trenton

Asked by wiki @ in History viewed by 59 persons

How did geography influence the Battle of Trenton? Washington built fortifications at Bemis Heights to control high ground to force British surrender Washington used unlikely river crossing and cover of …

Which of the following best describes the international trade effect

Asked by wiki @ in Social Studies viewed by 290 persons

Which of the following best describes the effect globalization has had on some American and Canadian workers? A. Many have had emigrate to follow jobs that were moved overseas. B. …

Rna viruses require their own supply of certain enzymes because

Asked by wiki @ in Biology viewed by 111 persons

RNA viruses require their own supply of certain enzymes because a. host cells rapidly destroy the viruses. b. host cells lack enzymes that can replicate the viral genome. c. these …

According to the table what is omar's bank balance

Asked by wiki @ in Social Studies viewed by 276 persons

Look at the table below showing an example of a checkbook ledger. According to the table, what is Omar’s bank balance? $761.25 $810.30 $814.75 $1,186.25

If the contribution margin ratio for france company is 45

Asked by wiki @ in Business viewed by 155 persons

If the contribution margin ratio for france company is 45%, sales were $425,000, and fixed costs were $100,000, what was the income from operations? a. $191,250 b. $233,750 c. $133,750 …

Which sentence most accurately describes a feature of elizabethan drama

Asked by wiki @ in English viewed by 669 persons

Which sentence most accurately describes a feature of Elizabethan drama? A. Plays were generally about science fiction. B. Plays were generally about real life. C. The scenery and setting were …

What is the effect of parallelism in this excerpt

Asked by wiki @ in English viewed by 65 persons

Read the excerpt from Edgar Allan Poe’s the masque of the red death. What is the effect of parallelism in this excerpt

Nosotros preferir este restaurante al restaurante italiano

Asked by wiki @ in Spanish viewed by 394 persons

1. (nosotros) / preferir / este restaurante al restaurante italiano 2. mis amigos / seguir / a Gustavo para encontrar el restaurante 3. la camarera / servirte / huevos fritos …

What caused baby david's death

Asked by wiki @ in Social Studies viewed by 178 persons

Texas impact driving question 1 of 5: what caused baby david's death?

Which of the following statements is true regarding organic molecules

Asked by wiki @ in Biology viewed by 276 persons

Which of the following statements is true regarding organic molecules?a. Carbohydrates are a large and diverse group of molecules composed of carbon, hydrogen, and oxygen.b. Examples include glycogen and starch.c. …

How do you find the domain of a piecewise function

Asked by wiki @ in Mathematics viewed by 182 persons

Find the domain of the following piecewise function

Some stretching exercise can be harmful even if performed correctly

Asked by wiki @ in Health viewed by 112 persons

Some stretching exercise can be harmful, even if performed correctly. a. True b. False?

Which equation could represent a linear combination of the system

Asked by wiki @ in Mathematics viewed by 222 persons

The system of equations below has no solution. 2/3x+5/2y=15 4x+15y=12 Which equation could represent a linear combination of the system? A) 4/3x=42 B)0=26 C)15/2y=33 D)0=0

How to prove that a cyclic parallelogram is a rectangle

Asked by wiki @ in Mathematics viewed by 106 persons

Prove that a cyclic parallelogram is a rectangle.

Most viewed questions in Business


Records are anything papers memos

Asked by wiki @ in Business viewed by 2293 persons


A borrower questions the amount of the notary signing fee

Asked by wiki @ in Business viewed by 2272 persons


Transfer prices should be set at check all that apply

Asked by wiki @ in Business viewed by 1598 persons



Which ics functional area sets the incident objectives

Asked by wiki @ in Business viewed by 1254 persons


If the earnings per share of a company is 3.85

Asked by wiki @ in Business viewed by 1140 persons


Which 2 statements about setting up quickbooks payments are true

Asked by wiki @ in Business viewed by 1104 persons



Which statement about journal entries in quickbooks online is true

Asked by wiki @ in Business viewed by 1048 persons


Which among the following is recommended way to run retrospectives

Asked by wiki @ in Business viewed by 1007 persons


Members should use the aicpa conceptual framework for independence to

Asked by wiki @ in Business viewed by 966 persons



Osha written plan for emergency operations the employer must identify

Asked by wiki @ in Business viewed by 934 persons


A company is selling used office equipment for 12000

Asked by wiki @ in Business viewed by 914 persons


Izzy's ice cream is an international business as such it

Asked by wiki @ in Business viewed by 853 persons



The importance of cash flows in the absolute valuation process

Asked by wiki @ in Business viewed by 828 persons


The change brought about by online competition are examples of

Asked by wiki @ in Business viewed by 808 persons


A company opting to boost its sales of branded footwear

Asked by wiki @ in Business viewed by 803 persons